Do you receive mountains of credit card offers? How in the world do you choose what's best for you and your practice? Start with a couple of questions: For what do I intend to use the card? Do I want to carry debt over time or pay it off in full?
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As a dentist, you probably receive a mountain of credit card offersat your home and office. The offers claim, “0% rate!” “No annual fee!” “Transfer your balance today!”
The promises are endless and many creditors honor them, but it’s important to read the fine print and play by the rules so you maximize the benefits. With patients to care for and busy offices to manage, you can’t review every credit card offer that comes your way. So how do you choose the right one? First, ask yourself these two questions: For what do I intend to use the card? Do I want to carry debt over time or pay it off in full?
Once you’ve answered those, here are five credit card features to consider:
Annual percentage rate (APR)
The lowdown: If you intend to pay off your balance every month, the rate may not be a consideration for you. If you’re going to carry a balance, look for a card that offers 0% APR. For example, if you have a large purchase such as a $30,000 piece of equipment, a card with a low or 0% rate will incur you less cost in the long run—if you make your payments on time. It’s also worth noting that many cards with 0% offset the risk by offering a lower credit line.
Beware: If you miss even a single payment,you could lose the 0% APR, and a high penalty rate could kick in. Also, many low rates are offered during an introductory period and go up after that time. The longer the 0% intro period, the higher the APR will be after the fact.
Bottom line: Your credit score and income affect the APR you’re offered.
The lowdown: See if the card offers the ability to transfer balances.
Beware:Some cards have hidden fees and high penalty rates when balances are transferred, which will eliminate your 0% if you miss a payment. Standard fees range from 3% to 5%, but if that’s less than your current APR, it is a one-time fee that will still save you a lot of time and money.
Bottom line: Make sure you pay off the balance in time to maximize the transfer benefit. Also, look into whether or not the card is retroactive, meaning will they go back and charge you full APR on the full balance that you transfer?
The lowdown: Traditionally, limits for business cards are higher than personal cards. A creditor will probably look at your gross revenue in addition to your personal revenue. Also, your debt-to-income ratio can have an impact on your limit.
Beware: Be careful about going over your limit. The fees could potentially be worse than being late.
Bottom line: If it’s for business purposes, your desired limit will depend on your purpose. Are you using the card just for supplies and plan to pay it off, or do you need to buy a $40,000 piece of equipment? This will help you make the best decision when choosing a card. Know that creditors typically will increase a limit only after you’ve been with them for six months to a year.
The lowdown: Some cards are tailored to health-care professionals to earn rewards for supply purchases, medical equipment purchases, and continuing educations costs. Other cards offer cash back (that you can put toward your business), airline miles, or points that you can use at your discretion. Whatever you choose, inquire about the flexibility of changing rewards and the ease of redemption.
Beware:Some cards dictate that you have to pay off the balance in full each month to get the rewards. They have high annual fees, capped rewards, rewards that expire, or programs that you have to activate in order to receive the awards. Make sure to read the fine print!
Bottom line:Rewards are a personal preference. Get what is most relevant to you or your business.
The lowdown:Many cards today have an annual fee, especially rewards cards.
Beware:While some cards have no fee for the first year, one might kick in after that.
Bottom line:Don’t dismiss a card just because there’s an annual fee. If it has other benefits that you really like, then a fee should not matter. However, if there’s a fee and you’re hardly ever going to use the card, then it probably doesn’t make sense.
You’re typically not going to get what you want in each of these categories, but you can choose the ones that are most important to you once you’ve decided the purpose of your card. Health-care professionals are some of the most sought-after customers from both a business and personal standpoint. Before you sign up for your next card, do your research, read the fine print, and evaluate your risks.